Investors Await Core PCE Inflation Data Ahead Fed Rate Decision

Investors are closely watching the release of the core personal consumption expenditures (PCE) price index, the Federal Reserve's preferred inflation gauge, which is expected to show a steady 0.3% monthly increase and a 2.9% annual rate, potentially influencing the Fed's policy decisions in September. Despite expectations of a 25-basis-point rate cut next month, uncertainty remains about subsequent moves, with Fed Governor Christopher Waller advocating for starting cuts soon to move policy towards neutral. President Donald Trump's assertive actions to influence monetary policy, including his unprecedented announcement to fire Fed Governor Lisa Cook who subsequently filed a lawsuit, have raised concerns about the Fed's independence. Meanwhile, the U.S. economy shows signs of strength with a revised Q2 GDP growth rate of 3.3%, supported by business investment and trade, which, along with sticky inflation, creates a challenging environment for the Fed's policy path. European Central Bank policymakers remain divided on inflation outlooks, reflecting global uncertainty. The NASDAQ 100 reflects this mixed economic backdrop, with gains supported by strong growth fundamentals but tempered by persistent inflation, highlighting the tension between growth optimism and cautious Fed policy.